Only a small number of people really get the idea that building a business is not a sprint – it’s an endurance race. It is all about who can last the longest.
Observing and working with literally thousands of AEC business owners over the years has taught me that a small number of people really get the idea that building a business is not a sprint. It’s an endurance race. It is all about who can last the longest. The question is, “What are some things you can do to build a firm that will outlast you?”
There are many reasons that is important. You want to be there for your loyal clients who need you. You want to provide what could be lifetime opportunities for your employees. You want to build something good and be known for it. And you want to maximize your exit options and value should you ever decide to retire or do something else in the future. Any or all of those could be motivators to build an enduring business.
If building an enduring business is something you want to do, here is my best advice as the founder of a more than 34-year-old business that is still going strong:
- Make ongoing business planning part of your operational discipline. Business planning is not an academic exercise. It is a discipline. I think business planning is more important in a project-driven business like an AEC firm than it might be in other types of businesses because the projects and clients are where the priorities are. And because one constantly has deadlines set externally and always has projects to do and clients to serve, “working on the business” can too easily be relegated to the back seat. Yet, there are always problems and opportunities that need some intentional management time to either solve or capitalize on. The business plan is the place to address those – it’s where priorities are established – and it establishes goals for the business that are motivational for everyone in the organization. Business plans aren’t static, especially in times like now where everything is changing at a faster and faster pace. They have to be updated and modified continuously.
- Focus on constant innovation and finding better ways to market your business. I have thrown this idea out there in my writings and talks many times: Finding new ways to market and new services (or service packages) to sell should be a regular part of your business planning process. I am a big fan of having each profit center come up with three to five new ways to sell their services and three to five new services to sell each year as a part of the annual business planning process. This will “bake in” innovation, something that is essential for any business that wants to evolve and grow in a dynamic market over a long period of time. There are many other ways to support innovation. Having a real R&D budget and time allocated for people to spend on new stuff or figuring out better ways to do things is critical. So is over-investing in IT. I remember years ago when WD Partners in Columbus, Ohio, was growing so rapidly that they had an IT budget that was about twice what a normal big “A,” small “E” firm like theirs would have. It was a conscious decision to find ways to spend money to figure out better and faster ways to do things and one of the reasons for their dramatic growth over an extended period of time.
- Build a brand. My article in last week’s issue of The Zweig Letter went into this topic in depth. But the bottom line is you CAN build a brand for any firm in this business, regardless of size or geographic market served, and if you do you will get multiple benefits. Clients and project opportunities will come to you versus you going to them. You will be in a better position to cement higher fees. The best employees will be contacting you trying to get on there. And the value of your business will be higher when you decide to get out of it. It takes some money (though not a lot), along with some real discipline to build a brand (something so many firms in this business lack).
- Don’t think it’s OK to not be growing. If you aren’t entrepreneurial, and only want a business to support your personal living expenses and ego glorification, and don’t care if anyone leaves you, then by all means “stay small successfully.” If, on the other hand, you don’t want to wake up one day and find that the handful of people who work for you have all decided to go somewhere else, you may want to consider committing to a regular growth goal. Yes, I am advocating growth for the sake of growth. I know that gives a lot of people heartburn, but having constant growth is essential to maintaining a really good team. It is also necessary to keep improving your offerings and reducing the risk of the business by being less dependent on any one client. Don’t kid yourself that it’s OK to not be trying to grow. It isn’t if you want to win the race over the long haul.
- Learn to be an effective delegator. You cannot grow yourself if you can’t get competent people doing most, if not all, of what you are doing yourself right now. Delegation is a skill that can be taught. It requires you to spend time with the people who work for you to train them in how to do things. They won’t be as good as you are at first, but could be better at whatever it is that you do over time. And when they are, they will not only be happier and more motivated, you will be liberated! YOUR motivation as a leader in your firm is essential not just to you, but to everyone else who works there as well. Think about that.
- Share your numbers with everyone. Open-book management in some form is absolutely essential to your ability to train enough people in business skills that the firm will be able to survive the comings and goings of anyone. Get over your fears that your people cannot understand this stuff. They can. It isn’t that difficult. If they can do the complex design and technical work that they do every day, they can certainly learn to understand concepts like average collection period, utilization, labor multiplier, revenue factor, accrual revenue, and proposal hit rate. All of this stuff is SIMPLE compared to what they are already doing in the course of doing their jobs. You need everyone in the firm to understand the financial aspects of the business if you want to be a firm that lasts over the long haul.
- Don’t be greedy or selfish, or a glory hound who hogs all the accolades and credit. If you are making $500K a year and your next level down is making $100K, maybe that isn’t fair. Maybe more of that money does need to go down to the rest of the staff if you want to keep them working there and having a good attitude, and serving your clients the way you want them served. And when it comes to credit and recognition, it is (according to one credible, multi-source survey I saw recently) the NUMBER ONE reason people quit your firm. Promote their accomplishments. Promote their achievements. Show appreciation. Build a positive culture of celebration around the good things your people do every day. The long-term benefits will be well worth it. And you will have a workplace you enjoy working in more every day.
These seven things are just some of the keys to building a firm that will be self-sustaining and survive beyond your involvement with it. And isn’t that really one big way you can create a lasting legacy for yourself? I think so.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at email@example.com.Click here for this week's issue of The Zweig Letter!